Note 6 Stockholders' equity

(XLS:)

 

Share
capital

Legal reserves

Free reserves

Total 2011

(CHF in thousands)

 

Ordinary
reserves

Capital
contri-
bution
reserve

Reserve
for own
shares

Other
reserves

Retained
earnings

Net
income

 

Opening balance as of January 1

2,378,046

4,424,853

532,475

3,893,862

1,264,077

12,493,313

Allocation to retained earnings

 

 

 

 

 

1,264,077

(1,264,077)

Allocation from retained earnings

 

1,000,000

1,954,428

 

 

(2.954.428)

 

Release to other reserves

 

 

(1,195,630)

 

1,195,630

 

 

Dividend payment

 

 

 

 

(1,195,630)

 

 

(1,195,630)

Management plan issuance

6,140

 

85,066

 

 

 

 

91,206

Release to other reserves

 

 

 

(20,723)

20,723

 

 

Net income for the year

 

 

 

 

 

 

1,094,007

1,094,007

Closing balance as of December 31

2,384,186

1,000,000

5,268,717

511,752

20,723

2,203,511

1,094,007

12,482,896

(XLS:)

Share capital as of December 31, 2011

Number of
registered shares

Par value

Total
(CHF in thousands)

Issued shares

2,314,743,264

CHF 1.03

2,384,186

Contingent shares

304,038,800

CHF 1.03

313,160

Authorized shares

200,000,000

CHF 1.03

206,000

(XLS:)

Share capital as of December 31, 2010

Number of
registered shares

Par value

Total
(CHF in thousands)

Issued shares

2,308,782,064

CHF 1.03

2,378,046

Contingent shares

238,857,691

CHF 1.03

246,023

Authorized shares

200,000,000

CHF 1.03

206,000

During 2011, a bank holding call options related to ABB Group’s management incentive plan (MIP) exercised a portion of the options. Such options had been issued by the group company that facilitates the MIP (related to MIP launches during 2006) at fair value and with a strike price of CHF 15.30. At issuance, the group company had entered into an intercompany option agreement with the same terms and conditions to enable it to meet its future obligations. As a result of the exercise by the bank, the Company issued 5,961,200 shares at CHF 15.30 out of contingent capital, thereby increasing the Company’s share capital and capital contribution reserve by CHF 6,140 thousand and CHF 85,066 thousand, respectively.

The ABB Group has an employee share acquisition plan (ESAP). To enable the group company that facilitates the ESAP to deliver shares to employees who have exercised their stock options, the group company entered into an agreement with the Company to acquire the required number of shares at their then market value from the Company. Consequently in November 2011, the Company issued, out of own shares, to the group company 20,366 shares at CHF 16.75 (USD 18.28, equivalent to CHF 16.52, for those shares issued to be converted into American depositary shares).

In 2011 and 2010, the Company transferred 964,943 and 807,161 own shares at an average price per share of CHF 21.03 and 21.78 to fulfill its obligations under share-based programs.

The average acquisition price of the own shares at both December 31, 2011 and 2010, was CHF 21.03.

The movement in the number of own shares during the year was as follows:

(XLS:)

 

2011

2010

Opening balance as of January 1

25,317,453

39,901,593

Cancellation

(22,675,000)

Purchases

12,100,000

Transfers

(985,309)

(4,009,140)

Closing balance as of December 31

24,332,144

25,317,453

The own shares are stated at the lower of cost or fair value. As a consequence of the decrease in the fair value, the own shares were revalued to CHF 17.68 from CHF 20.83 per share at December 31, 2011, resulting in a write-down of CHF 76,447 thousand in 2011.

As a result of the Swiss corporate tax reform II that became effective on January 1, 2011, qualifying contributions from the shareholders exceeding the nominal share capital can be distributed without deduction of Swiss withholding tax. According to the corresponding guidelines, such contributions have been recorded in a specific account (Capital contribution reserve) within the legal reserves in order to benefit from the favorable tax treatment.

Financial review

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